A growth-oriented portfolio with high concentration in large-cap US stocks
Report created on Mar 26, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
IV iShares Core S&P 500 ETF
IVV - US4642872000 66.67% -
QQ Invesco NASDAQ 100 ETF
QQQM - US46138G6492 33.33%
This portfolio is heavily concentrated in two ETFs: iShares Core S&P 500 (66.67%) and Invesco NASDAQ 100 (33.33%). While these ETFs provide exposure to large-cap US stocks, the portfolio lacks diversification across different asset classes. A more diversified portfolio typically includes a mix of stocks, bonds, and other asset types, which can help manage risk. Consider adding different asset classes to enhance diversification and potentially improve risk-adjusted returns.
Growth
Historically, the portfolio has shown strong performance with a CAGR of 14.32%, which is impressive. However, it also experienced a significant drawdown of -27.80%, indicating vulnerability during market downturns. Comparing this performance to a benchmark like the S&P 500 can help assess relative success. While past performance is not a predictor of future results, understanding these trends can guide future expectations and risk management strategies.
Projection
The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential returns. With a median forecast of 511.8% growth, the projections are optimistic, but the 5th percentile at 82.7% highlights potential downside risks. Remember, simulations are not guarantees; they offer a range of possibilities based on past trends. Regularly reviewing these projections can help adjust strategies to align with changing market conditions and personal goals.
Asset classes
- Stocks 100%
The portfolio is entirely allocated to stocks, which can lead to higher volatility. While stocks offer growth potential, a well-diversified portfolio usually includes bonds or other asset classes to balance risk and return. Compared to a benchmark with mixed asset classes, this portfolio may experience more significant fluctuations. Introducing bonds or alternative investments could help stabilize returns, especially during market downturns.
Sectors
- Technology 38%
- Telecommunications 12%
- Consumer Discretionary 11%
- Financials 9%
- Health Care 9%
- Industrials 6%
- Consumer Staples 6%
- Energy 3%
- Utilities 2%
- Basic Materials 2%
- Real Estate 2%
With 38% in technology, this portfolio is heavily weighted towards a single sector, which can lead to higher volatility, especially during tech market corrections. The sector allocation is imbalanced compared to common benchmarks that spread risk across various sectors. Consider adjusting the sector allocation to reduce concentration risk and enhance stability, particularly if technology faces headwinds.
Regions
- North America 99%
- Europe Developed 1%
The portfolio's geographic allocation is overwhelmingly in North America (99%), with minimal exposure to other regions. This lack of geographic diversification can increase vulnerability to regional economic downturns. Compared to global benchmarks, a more balanced geographic allocation may reduce risk. Including international assets could provide exposure to different growth opportunities and mitigate regional risks.
Market capitalization
- Mega-cap 48%
- Large-cap 35%
- Mid-cap 16%
- Small-cap 1%
The portfolio favors large-cap stocks, with 48% in mega-cap and 35% in big-cap companies. While large-cap stocks are generally more stable, they may offer lower growth potential compared to smaller companies. A more balanced market capitalization approach could enhance growth prospects. Consider adding mid-cap or small-cap stocks to capture potential high-growth opportunities and diversify risk.
Risk vs. return
This chart shows the Efficient Frontier, calculated using your current assets with different allocation combinations. It highlights the best balance between risk and return based on historical data. "Efficient" portfolios maximize returns for a given risk or minimize risk for a given return. Portfolios below the curve are less efficient. This is informational and not a recommendation to buy or sell any assets.
Click on the colored dots to explore allocations.
The portfolio could potentially benefit from optimization on the Efficient Frontier, which seeks the best risk-return ratio. Currently, the portfolio's high concentration in two ETFs may not fully utilize diversification benefits. Adjusting the allocation among existing assets could enhance efficiency. However, efficiency focuses on risk-return balance and may not address diversification or other goals. Regularly reassessing the portfolio can ensure alignment with personal objectives.
Dividends
- iShares Core S&P 500 ETF 1.00%
- Invesco NASDAQ 100 ETF 0.50%
- Weighted yield (per year) 0.83%
The portfolio's dividend yield is 0.83%, which is relatively low. While growth-focused portfolios often prioritize capital appreciation over income, dividends can provide a steady income stream and enhance total returns. Comparing this yield to benchmarks can offer insights into income generation. If income is a goal, consider increasing exposure to dividend-paying stocks or funds to boost yield.
Ongoing product costs
- iShares Core S&P 500 ETF 0.03%
- Invesco NASDAQ 100 ETF 0.15%
- Weighted costs total (per year) 0.07%
With a total expense ratio (TER) of 0.07%, this portfolio is cost-effective. Low costs are beneficial as they allow more of your returns to compound over time. Compared to industry averages, these costs are impressively low, supporting better long-term performance. Maintaining a focus on cost efficiency can continue to enhance returns. Regularly reviewing and minimizing expenses is a prudent strategy for optimizing investment outcomes.
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